KIEV (Reuters) - Ukraine's Finance Minister said on Tuesday Ukraine was fulfilling all its debt obligations despite strained restructuring talks and was not treating its $3 billion debt to Russia differently from its other bonds.
Ukraine is negotiating with foreign bondholders to restructure $23 billion worth of debt, but talks have soured over a disagreement on the necessity of a writedown on the principal of the bonds.
In May, Ukraine passed a law allowing it to halt payments if a deal with creditors remained elusive, but Finance Minister Natalia Yaresko said the country has not yet called the moratorium.
"We are continuing to pay all our obligations," she said at a Ukrainian-Swedish business forum that was streamed online, when asked if Ukraine planned to make upcoming coupon payments.
However speaking to parliament later, Yaresko said the country could stop servicing its debt if a deal was not reached that allowed it to meet three debt targets required by the International Monetary Fund.
"If we cannot bring our creditors to these three targets, then we will think about (using) the leverage ... to stop payments or not," she said.
The country needs to stump up a relatively small sum on Wednesday, as well as $70 million on June 20 - the latter to Russia, which holds a $3 billion bond maturing in December.
Paying Russia would be an unpopular move among many Ukrainians, given Moscow's annexation of the Crimea peninsula and its involvement in the separatist conflict in the eastern Ukraine.
Yaresko said Ukraine would not differentiate in its treatment of creditors, a position she has maintained throughout the debt crisis.
"It's better for all if we talk not just about Russian bonds, but about all our bonds," she said.
Russia has refused to participate in the restructuring process and on Monday President Poroshenko told Bloomberg the debt to Russia amounted to a "bribe", as it was agreed under previous president Yanukovich to keep Ukraine in Russia's orbit.
Nevertheless, he said Russia should be treated the same as other creditors.
Poroshenko's comment drew a sharp response from Russian Prime Minister Dmitry Medvedev.
"If the $3 billion Russian loan to Ukraine was a bribe, as Mr Poroshenko has called it, then the billions negotiated by Ukrainian leaders with the IMF is grand larceny," he said in a Facebook (NASDAQ:FB) post.
The restructuring deal is part of a $40 billion International Monetary Fund-led bailout package designed to shore up Ukraine's economy, which has been pushed close to bankruptcy by years of economic mismanagement and the separatist conflict.
Yaresko said Ukraine would still be able to receive funds from the IMF if it stops paying creditors, echoing comments by IMF chief Christine Lagarde on Friday.
"Stopping payments is not a terrible thing and it would not halt the IMF programme," she told parliament.